Thames Water is back in the news as it wants to hike customers’ bills again.
The water company’s request comes as the industry watchdog Ofwat calls for curbs on how much customers can be charged for the essential service.
Here’s what you need to know about the firm, why it is requesting more money and where the money is going.
A consortium of pension funds and sovereign wealth funds owns Thames Water, but that’s not particularly unusual in the industry.
More than 90% of English water companies are owned by international investors, private equity funds and banks.
They were all privatised in 1989 by then-PM Margaret Thatcher, selling it all off for £7.6 billon.
Thames Water is owned by a range of names, although the Canada-based Ontario Municipal Employee Retirement System owns the largest share according to the firm’s website, controlling around 32%.
The UK’s largest private pension fund, the Universities Superannuation Scheme, owns 20%, and a subsidiary of the Abu Dhabi Investment Authority – one of the world’s largest sovereign wealth funds – owns almost 10%.
British Columbia Investment Management Corporation owns 8.7% while one of Europe’s leading independent specialists in private markets, Hermes GPE, owns 8.7%.
China’s largest sovereign wealth fund, China Investment Corporation, also owns almost 8.6%.
The company originally called for a 44% rise over a five-year period, but now claims it will run out of money by next May if it is not allowed to put bills up by at least 52% by 2030.
That could climb to a 59% increase on bills – taking the average annual bill to £696 – if it is granted extra spending allowances by Ofwat.
Thames Water claims this proposed increase reflects its new projections based on how many customers it has.
As it stands, the company has a debt pile of more than £15bn.
Thames Water’s chief executive Chris Weston said: “The money we’re asking for from customers will be invested in new infrastructure and improving our services for the benefit of households and the environment.
“They are not being ask to pay twice but to make up for years of focus on keeping bills low.”
In a letter seen by Sky News, industry body Water UK called for fines for environmental damage have to be reduced and for bills to go up substantially.
It claims this will enable the industry can continue to deliver for customers, and that proposed cuts from Ofwat would delay plans to reduce leaks, sewage, discharges and service failures by attracting new international investment needed.
However the water regulator only wants bills to rise by an average of 21%.
Ofwat replied to the letter, saying: “We expect to receive responses from many organisations, including water companies, customers, environmental and consumer organisations and investors.
“These are likely to reflect a diverse range of views on the proposals we have made. We will consider all of these responses carefully.”
Its final decision will be published on December 19.
SHOCKING FACT: 90% of England’s protected river habitats are AT THREAT from pollution, sewage and DAMAGING human activity like dredging.
— Greenpeace UK (@GreenpeaceUK) August 27, 2024
Anyone else sick of this s***?
Like many of England and Wales’ water companies, Thames Water has been in the spotlight in recent years for allowing untreated sewage to flow into our waterways.
There were 584,001 such discharges in 2023 alone, according to campaigners at Surfers against Sewage.
At the start of August, Ofwat – which can fine water companies up to 10% of their relevant turnover – dished out a series of financial penalties after it “uncovered a catalogue of failures” linked to “excessive pills from storm overflows”.
Thames Water was fined 9% of their turnover (£104m), while Yorkshire Water was fined 7% for (£47m) and Northumbrian Water was fined 5% (£17m).
The regulator’s chief executive David Black said at the time: “Our investigation has shown how they routinely released sewage into our rivers and seas, rather than ensuring that this only happens in exceptional circumstances as the law intends.
“The level of penalties we intend to impose signals both the severity of the failings and our determination to take action to ensure water companies do more to deliver cleaner rivers and seas.
“These companies need to move at pace to put things right and meet their obligations to protect customers and the environment. They also need to transform how they look after the environment and to focus on doing better in the future.”
There are also concerns that Thames Water has been giving all of its money towards dividends.
According to The Telegraph back in April, Thames Water intends to pay £2bn in dividends over the next decade even as its collapse looms.
That works out to around £290m a year of payout, and £860m in dividends between 2025 and 2030.
